Nigeria has enforced double tax treaties with several countries of the world including Belgium, Canada, China and Pakistan. All the foreign companies that are working within the country also enjoy deduction in the income tax on the foreign profits that they have made. It is also to be noted that Nigeria is a member of 6 multilateral treaties providing waiver on tax filing to different countries the companies of which operate within Nigeria. All the commonwealth related companies that are operating within the country also enjoy a free income tax filing as well as 50% tax exemption provided the other country has also implemented the similar tax exemptions within their country.

Gas utilization Incentives

All the companies that are involved in the Gas utilization operations enjoy following incentives when it comes to income tax rates as well as filing:

Free income tax filing as well as 35% incentive on investment. Alternatively the company can also enjoy a tax free period of 3 years which can be renewed to another 2 years.

If the company has adopted the tax free option then an additional allowance of 15% is also granted to them.

Capital allowance acceleration is also provided after the tax free period finishes.

If the company fulfills certain conditions then a tax free dividend can also be enjoyed within the tax free period.

Petroleum profit tax incentives

The company that is indulged within the petroleum operations can file a free tax return if it has been filed within two months as soon as the fiscal year changes.

The actual tax return can also be free if it has been filed within 5 months i.e. not later than 31st

The petroleum investment allowance is also granted to the companies that work in the joint venture or JV.

All the onshore operations are subjected to 5% allowance when it comes to tax filing.

Beyond 100M depth of water the allowance that a company can enjoy is 10% on the total income generated from such operation

Beyond 200M eater depth the allowance to all such companies provided by the government is 20%.

In addition to petroleum allowance the government also makes sure that the annual allowance is granted to the companies in this regard. With respect to depreciation the allowance that is provided is 20% for the first 4 years including the free income tax filing.

Graduated free income tax filing has also been introduced by the government to make sure that the production is encourages within the country and this applies to all the companies irrespective of their operational areas The Nigerian government wants to make sure that the free income tax filing is provided to all the companies that are working as per the rules and regulations that have been defined by the authorities.